NEW DELHI: Just when UPA is under the hammer over food inflation, Union minister M K Alagiri has sounded alarm over shooting fertiliser prices under the Nutrient-Based Subsidy (NBS), saying the policy introduced last budget was hurting the poor farmer.
He said the experience of NBS in the fertiliser sector should halt the proposed price decontrol in the urea sector.
The DMK minister argued that urea was the most used fertiliser and decontrol of urea prices and a resultant spike would hurt 75% farmers who were small and marginal.
Alagiri had opposed the switch to NBS, but was disregarded. However, his red flag against urea decontrol may get more attention because of the rising food prices. A jump in urea prices will hurt farmers who helped Congress in the last Lok Sabha elections, and can add to the rising food prices.
In his letter to Prime Minister Manmohan Singh last week on urea decontrol, Alagiri had reminded him of his failed opposition to introduction of nutrient-linked subsidy for fertilisers.
An expert committee under Planning Commission member Saumitra Chaudhuri is examining the urea issue, but the final decision will be shaped more by the coalition leadership's political assessment.
The NBS regime which frees the fertiliser price and fixes the subsidy based on constituents of phospatic and potassic fertilisers kicked in after finance minister Pranab Mukherjee plumped in its favour. Five of the seven ministers including Alagiri in the Mukherjee-chaired Group of Ministers had opposed it. Even the cabinet meeting just before the budget 2010 which cleared the policy saw an extended debate with widespread concerns.
The government had dismissed fears of price rise by citing a commitment from the fertiliser industry that it would freeze the MRP for one year.
Ten months later, as Centre mulls extension of NBS to the urea sector, Alagiri has pressed the alarm button by writing to the PM and finance minister Mukherjee.
He told the PM that farmgate prices of P&K fertilisers have shot up by 15% or Rs 75 per bag of DAP fertiliser. His concern is while farmers have not benefitted, government too is losing with increasing subsidy bill. Holding up a warning sign, he said the departmental feedback indicated that fertilisers prices would increase further in the coming Kharif season.
For the son of Tamil Nadu chief minister M Karunanidhi with leadership stakes in April polls, the concern revolves around DMK's rivals blaming him for the policy under his charge in the Union fertilisers ministry.
While NBS for fertilisers seems unshakeable now, Alagiri has trained his guns on the regime's extension to urea. The Department of Fertilisers has demanded that New Pricing Scheme which expired in March should be extended for three years to give time for transition. Sources said Alagiri told the PM that the vacuum on pricing policy following expiry of the current one has triggered financial crunch in urea units, specially in southern states, and new investments over Rs 50,000 crore were on hold.
The alarm from the fertiliser minister over shooting prices may not be comfortable for Congress which is under attack for sustained food inflation. If the opposition makes it an issue, it can turn the tables on the party in rural areas, pockets that DMK is looking to gain in riding on the welfare schemes of the Karunanidhi regime.
TOI
He said the experience of NBS in the fertiliser sector should halt the proposed price decontrol in the urea sector.
The DMK minister argued that urea was the most used fertiliser and decontrol of urea prices and a resultant spike would hurt 75% farmers who were small and marginal.
Alagiri had opposed the switch to NBS, but was disregarded. However, his red flag against urea decontrol may get more attention because of the rising food prices. A jump in urea prices will hurt farmers who helped Congress in the last Lok Sabha elections, and can add to the rising food prices.
In his letter to Prime Minister Manmohan Singh last week on urea decontrol, Alagiri had reminded him of his failed opposition to introduction of nutrient-linked subsidy for fertilisers.
An expert committee under Planning Commission member Saumitra Chaudhuri is examining the urea issue, but the final decision will be shaped more by the coalition leadership's political assessment.
The NBS regime which frees the fertiliser price and fixes the subsidy based on constituents of phospatic and potassic fertilisers kicked in after finance minister Pranab Mukherjee plumped in its favour. Five of the seven ministers including Alagiri in the Mukherjee-chaired Group of Ministers had opposed it. Even the cabinet meeting just before the budget 2010 which cleared the policy saw an extended debate with widespread concerns.
The government had dismissed fears of price rise by citing a commitment from the fertiliser industry that it would freeze the MRP for one year.
Ten months later, as Centre mulls extension of NBS to the urea sector, Alagiri has pressed the alarm button by writing to the PM and finance minister Mukherjee.
He told the PM that farmgate prices of P&K fertilisers have shot up by 15% or Rs 75 per bag of DAP fertiliser. His concern is while farmers have not benefitted, government too is losing with increasing subsidy bill. Holding up a warning sign, he said the departmental feedback indicated that fertilisers prices would increase further in the coming Kharif season.
For the son of Tamil Nadu chief minister M Karunanidhi with leadership stakes in April polls, the concern revolves around DMK's rivals blaming him for the policy under his charge in the Union fertilisers ministry.
While NBS for fertilisers seems unshakeable now, Alagiri has trained his guns on the regime's extension to urea. The Department of Fertilisers has demanded that New Pricing Scheme which expired in March should be extended for three years to give time for transition. Sources said Alagiri told the PM that the vacuum on pricing policy following expiry of the current one has triggered financial crunch in urea units, specially in southern states, and new investments over Rs 50,000 crore were on hold.
The alarm from the fertiliser minister over shooting prices may not be comfortable for Congress which is under attack for sustained food inflation. If the opposition makes it an issue, it can turn the tables on the party in rural areas, pockets that DMK is looking to gain in riding on the welfare schemes of the Karunanidhi regime.
TOI
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